Affleck & Anor v Newcastle Mind & Ors [1999] UKEAT 537_98_1003

EAT
Affleck & Anor v Newcastle Mind & Ors
[1999] UKEAT 537_98_1003 · 1999-03-10
For the Appellants MR W HENDERSON of Counsel (Amicus Curiae) MR C CLOSE in person and on behalf of Mrs B Affleck MRS L COLBACK the Appellant in person MRS M ANDERSON representative on behalf of Mrs C BatesFor the Respondents MR A SENDALL of Counsel BAR PRO BONO UNIT on behalf of Mr T BlakeMR T SMITH Solicitor on behalf of Mr and Mrs Lowery MR P MOLONEY QC of Counsel on behalf of City of Newcastle upon Tyne & Mr A MetcalfTHE HONOURABLE MR JUSTICE MORISON (PRESIDENT): Who is the employer in circumstances in which a registered charity and an incorporated association has members of staff who are dissatisfied with the treatment they received during the course of their employment and by the circumstances in which they came to be dismissed? That is the question at issue in this case. There are two decisions of Industrial Tribunals which concluded that the answer to that question was that the employees of that charity were employed by all the members of the charity. That decision will have come as a nasty shock, I am sure, to people who had become members of Newcastle MIND, because it would not have occurred to them that by paying a subscription and making a contribution to the charity they had exposed themselves to the potential liability that arises in these cases.It was therefore with gratitude that we listened to the cogent argument addressed to us by the friend of the court, the Amicus Curiae, and Mr Henderson represented the interests of the attorney general before us. We would like publicly to express our gratitude to him.It seems to us at the end of the day that the position as to the identity of the employer in a case such as this can be answered in a straightforward manner. The Charities Act 1993 imposes statutory controls and restrictions upon registered charities. The Act does not apply to every charity but it does apply to this charity. It is plain from looking at the structure and definitions in the Charities Act 1993 that Parliament has recognised the different legal personae that a charity may have in law. A charity may be created through a Royal Charter. It may be a company, registered under the Companies Act. It may be a simple trust with trustees, or it may be, as in this case, an unincorporated association.The Charities Act is apt to apply to charities registered under the Act in whatever guise they come. Furthermore, it seems to us that the question as to who is the employer is to be answered, not by reference to the Charities Act itself, but by reference to the general law which applies in this case to unincorporated associations. Unincorporated associations themselves take various forms. In this particular form, the assets of the unincorporated association do not belong to the members. They are imprinted with a charitable trust. They are held in this particular case, by trustees under the rules of the unincorporated association. It is not like a members club where the members themselves may be said to own the assets of the club of which they are a member so that on its dissolution they will be entitled to a proportionate part of the money. In this case, if a charity comes to an end and there is property available then that property will be applied for charitable purposes. Those purposes will of course include the necessary administration which must be carried on so that the charity may be administered in a proper manner.In the case in question, it seems to us quite clear that the management function of this charity was vested in the executive committee of the charity. It so happens that by reference to section 97 of the Charities Act 1993 the people who have the general control and management of the administration of a charity, that is, in this case, members of the executive committee, are also charity trustees within the meaning of the Act because section 97(1) defines for the purposes of the legislation charity trustees as meaning "the persons having the general control and management of the administration of a charity". The fact that members of the committee were under the Act charity trustees does not alter the position at law in relation to employment relationships.The problem in law that arises with people who are employees of unincorporated associations relates to issues of continuity. It is the case in almost every unincorporated association with which this Tribunal is familiar that members of the management or executive committee will change from time to time as a result of some members stepping down and others being elected in their stead. It could be thought therefore that if a person was employed by the executive committee and one of the members of the committee resigned, the employment was novated with the new committee in circumstances where the statute does not say that there is continuity of employment. Accordingly, it could be thought with unincorporated associations that every time there was a change in the composition of the management committee, which was responsible for employing them, there was a change in the employer and accordingly there was no continuity.It is a fact that the law and reality have departed from time to time in the context of an unincorporated associations: to such an extent that trades people dealing with unincorporated associations, such as clubs, could find themselves without remedy in the event, for example, that they had not been paid for the goods which had been supplied. The position has partially been rectified in the mid 1940's as a result of the courts recognising the absurdity and unreality of that position. We are now moving into a new century and since 1972, there has been legislation which has sought to protect the interests of employees, whether they be employed by companies or by unincorporated associations. We have no doubt that employees of unincorporated associations, whether they be registered as charities or not, do have continuity of employment despite changes in the composition in the committee which constitutes their employer. It is our view that the way that comes about is through the contract of employment being made with the management committee and its members for the time being.Counsel for the attorney general would prefer to put the point in a slightly different way. He would say that the same result could be achieved by applying section 218 of the Employment Rights Act 1996. He draws attention to section 218(2):
"If a trade or business, or an undertaking (whether or not established by or under an Act), is transferred from one person to another:- (a) the period of employment of an employee in the trade or business or undertaking at the time of the transfer counts as a period of employment with the transferee, and (b) the transfer does not break the continuity of the period of employment."
and says that effectively there is a transfer of an undertaking every time the membership of the committee changes. Reference can be made to the word "business" in section 218(2) and to the definition of that word in section 235 which defines "business" to include a trade or profession and includes any activity carried on by a body of person (whether corporate or unincorporated). He accepts that if there is a transfer of a business or undertaking, then the provisions of the acquired rights directive would apply as would the 1981 Regulations, and that the effect of those Regulations is to transfer on to the newly constituted committee the liabilities of the previous constituted committee, because acts done by the previously constituted committee are deemed to have been done by the newly constituted committee. That is the effect of Regulation 5(2) of the Transfer of Undertakings Protection of Employment Regulations.The difference, and only difference, he perceived between the formulation that an employee was employed by the committee as constituted from time to time as we respectfully suggest and the position which he would respectfully ask us to adopt relates to a period of time after the employee has been dismissed and before the proceedings have been commenced. He points out that Regulation 5 is apt to apply to the transfer of liability in relation to somebody whose employment contract is still in existence. If the employment contract has been terminated, then Regulation 5 would not be apt to apply so as to transfer liability. Accordingly, if there was a change in the composition in a committee between the date when a person was dismissed and the date when proceedings were begun, the newly constituted committee could not have had transferred to it liabilities in relation to a contract of employment which had been terminated.It may not make any difference in this case, but if it became necessary to choose between the two, we have to say that we would prefer the formulation which we put forward, namely that people who are employed by unincorporated association are employed by the relevant management committee as from time to time may be composed. The reason why we take that view is because it seems to us to accord entirely with reality. Employees of a charity such as this would know when they were taken on, that the management committee was not going to remain the same throughout the course of their employment. They would anticipate their employment would be continuous without any break in continuity as a result of an anticipated change in the composition of the committee.The concept of transfer does not fit entirely well with what happens when a committee member resigns and a new committee member is elected, but we agree with Mr Henderson and embrace the argument which he was putting to us, which was that however it was to be achieved it would be a glaring loophole in the law if employees of unincorporated associations (in particular of those which are registered as charities) were to lose protection under the legislation through lack of continuity. Section 218 is difficult to fit in with the objective to be achieved. We quite understand the force of the argument under section 218(2). It was also suggested in argument that 218(5) might be capable of applying, treating the word "trustees" as apt to include the special definition of charity trustees within the 1993 Act, but also it seems to us that that is stretching those words having regard to the provisions of subsection 4. There is no easy answer, but we are happy to adopt a purposive approach to the construction of social legislation of this kind so as to ensure that those who are employed by unincorporated associations do not lose their continuity by an event which they know perfectly well when they take on their employment is almost inevitably going to occur, namely a change in the composition of the committee by whom they are employed.It follows, as it seems to us, quite clearly that with great respect to the two learned Chairman, their conclusion that the employment contract was with the members of the charity is wrong in law and cannot be sustained. We are, as we have indicated, happy to arrive at that conclusion and it has to be said that Mrs Bates would wish that point to be taken, even though it might mean that she herself became a target in these proceedings. It is to her credit that she herself has wished to appeal the decision of the Industrial Tribunal because she recognises the injustice that that would do to those people who very often out of altruistic motives wish to become members of a charity such as this.In those circumstances, the appeal against those two decisions must be allowed and the matter must now go back to the Industrial Tribunal to decide what it should do. The first thing to draw attention to is that having identified the committee members as being the people who are the employers throughout the course of the employment, the target is well identified for the purposes of who should be sued. Under the Tribunals Rules of Procedure, paragraph 17(3), it is quite possible for there to be a representative respondent and in such a case as this, it would be desirable if this were possible for that to be done: namely, one person would be named as the Respondent sued on his own behalf and on behalf of all other members of the executive committee at the relevant time.Where there is a faction or factional dispute between the members of the committee, it may not be possible to provide for a representative respondent because it may be that the other members of the committee would not be content for their affairs to be handled by the named individual. Whether that is the position in this case or not remains to be seen. Of course it is possible for any of the members of the executive committee to apply to be joined as a respondent as they plainly have an interest in these proceedings.Discussion has taken place about the position of Mr Metcalf. It is the complainant's contention that Mr Metcalf is substantially to blame for the wrongs which they perceive themselves to have been subjected to. They say that he was the driving force at the relevant time behind the charity, but he was not, as I understand it, a member of the charity, nor was he formally a member of the management committee. In these circumstances, he is not a proper respondent as he was not a member of the committee at the time. But it will become apparent from reading this decision that we have not sought to deal with quite difficult questions which may arise in the event that the Applicants are successful in their applications.Compensation will no doubt be awarded if that eventuality arises and it will be awarded against the members of the executive committee who were on the committee at the relevant time. What is the relationship between the members of the committee, one to another. That is not a question with which the Industrial Tribunal will be concerned but it might well become necessary for the members of the executive committee to dispute between themselves as to who bears responsibility for the consequences of any unlawful act which has occurred, and it may be in relation to people who are not members of the executive committee but who were acting in an advisory role or other role, that the members of the executive committee if found liable to the complainants will have rights over against such individuals. That is again something which is not a matter for the Industrial Tribunal. They are simply concerned to identify the employer and to determine whether the employment rights of the individuals have been broken in the way that they have alleged.Furthermore the Industrial Tribunal will not be concerned with the question as to whether, if there is liability, the members of the executive committee could look to the funds of the charity which are held by trustees to reimburse them in relation to their liabilities. It may be that there are no funds available, I do not know, but even if there were funds available questions might arise as to whether the members of the executive committee were in what they were doing, acting properly and in the interest of the charity. Only if they were would they be entitled themselves to be reimbursed out of charitable monies but that again, as I have indicated, that is not a problem for the Employment Tribunal and is not something with which this court is concerned.In those circumstances, we direct that the Tribunal hold their directions hearing, first of all to decide who shall be the named respondents applying paragraph 17(3) and secondly, to give direction as to how these cases should now proceed to a full hearing. It may well be in this case that the cases should not be conjoined in the formal sense, but they should be decided each case on its own. But it may also be sensible for the same Tribunal to hear each of the cases, one after the other, so as to avoid the risk that on the same background evidence different findings of fact were made by different Tribunals. Again, we cannot assist in the determination of such an issue. It is best left to the good sense of the case manager, the Industrial Tribunal, which is going to have to deal with them. What we would like to say is that it is of the utmost importance that these claims should be heard and determined on their merits as soon as possible. We respectfully invite the Industrial Tribunal to deal with these matters as matter of urgency having regard to the time which has elapsed so far. It is unfair to all the participants to these proceedings that this matter should be dragging on. There is good evidence before us, provided to us by Counsel, that already these proceedings have caused anxiety and significant distress and emotional upset and in those circumstances, the sooner the case is heard the better from everybody's perspective so that the matters can be laid to rest.This appeal is allowed and a finding substituted that the Applicants were employed by the members of the Executive Committee for the time being.